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Case: SEBI Vs Sahara – What Went Wrong?


  • Amity Business School, Lucknow, Amity University, Uttar Pradesh, India


Starting with a capital of just Rs. 2000 in the late 1970s, Subrata Roy started his company "Sahara". By the passage of time and with his hard work, dedication and confidence the company grew up into a business giant "Sahara Group". His business was founded on chit-funds or para-banking, raising deposits from small investors, sometimes even collecting single penny a day. Roy's hard work paid back and today Sahara as Empire has real estate, finance, aviation, media, entertainment and retail etc in its periphery. The company's net worth varies widely from one lac to Rs. 17,000 crores. At the same time, the source of Subrata Roy's wealth remains a mystery - absolutely with no manufacturing, no trading and no presence in the stock market. Sahara case came to lime light when SEBI started to report Media about the money worth approx. Rs. 24,000 crores raised from estimated three crores investors. Two Sahara groups SIRCEL and SHILCL came under query for raising money through Optionally Fully Convertible Debentures (OFCD's). SEBI alleged that Sahara has so far not returned the due money to their investors. Sahara claimed that before hearing of the case in apex court dated August 2012, they had made the payment of around Rs. 20,000 crores to their investors and due amount Rs. 5,120 crores was also deposited to SEBI. As per the guidelines of apex court, SEBI had to refund the deposited amount to the genuine investors after verification. The war of ideologies continues between SEBI and Sahara group. SEBI stands with queries about the possibility and feasibility of paying Rs. 20,000 crores in cash. In return Sahara confirms that it has investors from small towns and villages investing in petty amount worth Rs. 2000 to 20,000 and henceforth it is convenient to refund money in cash. SEBI claimed that during the verification process of investors, it found many cases with multiple claims by same investors, multiple addresses for single investors, untraceable addresses of investors etc and this has put Sahara group under question and suspicion. Hearing of the same case is scheduled dated 17 July, 2013 in the Apex court. Some of the loop holes need to be scrutinized and answered. The integrity of the business institutions and rights of the investors are under serious monitoring and this case may turn to be an eye opener for students, faculty and industry practitioners as well.


Investors, Mystery, Optional Fully Convertible Debenture (OFCD), Sahara, SEBI, Verification.

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